Assignment 3: Final Project: Part 1
For your final project, you will conduct a course-long comprehensive analysis of select operations for the Vanda-Laye Corporation. Through Weeks 1, 3, and 5, you will conduct an analysis of given situations for the company and use that analysis in the decision-making process.
The final project will be due in Week 5 and will be a comprehensive analysis document with a write-up and graphs. The assignments in Weeks 3 and 5 are major projects and may be time consuming. Accordingly, work on these portions of the final project should begin prior to the week in which they are due. The following is a summary of the weekly deliverables for your final project:
|Week 1||An analysis of supply and demand data, with supporting information regarding market conditions and possible changes in those conditions|
|Week 3||A report on possible operating structures for the company, including CVP analysis, operating leverage, and return on equity (ROE)|
Assignment for Week 1
Final Project Scenario
You are an economist for the Vanda-Laye Corporation, which produces and distributes outdoor cooking supplies. The company has come under new ownership and management and will be undergoing changes in its product lines and operating structure. As an economist, your responsibilities include examining the market factors that affect success or failure of a product, including the supply and demand for the product, market conditions, and the behavior of competitors with similar products.
Your supervisor, Jorge, has assigned you the task of evaluating a new product. The new product, oven mittens, has several competitors in the marketplace, but your company will be using a new patented material that provides protection from heat and maintains a great deal of flexibility. The supply and demand functions for oven mittens are as follows:
Qd = 45 – 6.9P
Qs = –15 + 10P
where Qd is the quantity demanded, Qs the quantity supplied, and P the price.
Jorge has asked you to research the market and provide detailed responses to the following questions:
- What is the equilibrium price and quantity for oven mittens? Using Microsoft Excel, construct a table that shows the quantity demanded, the quantity supplied, and the surplus or shortage associated with prices from $2 to $5.55. (Use appropriate intervals.) Indicate the level at which equilibrium is achieved. Graph the data, indicating the equilibrium level and the areas of shortage or surplus.
- If a price floor were established at $4, what would happen in this market? Explain your answer.
- If a price ceiling were established at $3, what would happen in this market? Explain your answer.
- What will happen to the demand curve for the product if the following changes occur? Answer separately for each change, assuming each event to be independent of the other:
- The price of the substitute Good A increases.
- The price of the complementary Good C increases.
- Compile your calculations and graph in a Microsoft Excel spreadsheet named as SU_MBA5004_W1_A3_LastName_FirstInitial.xls and your analysis in a Microsoft Word document named as SU_MBA5004_W1_A3_LastName_FirstInitial.doc.
- By Tuesday, April 5, 2016, submit these documents to the W1 Assignment 3 Dropbox.